2021 Stock Market

[BCClone]

Well, it's not so much that the capital gains are taxed differently, but rather that REITs in general are taxed differently. Income is taxed mostly as ordinary income or capital gains rather than dividends. My investment is via an IRA, so there are no tax implications. A company has to distribute at least 90% of profits to qualify as a REIT. Many distribute 100% (or more) to avoid double taxation.

It's a bit complicated, but here's how NLY does it:

Annaly

Annaly Capital Tax Information

www.annaly.com

Keep in mind that not all REITs own real estate. In the case of mortgage REITs, they borrow money and use it to purchase mortgages. Although they are "dividends," they're treated as distributions...most of which would be rental income if they own property...aka ordinary income. But as I mentioned above, not necessarily entirely. They can be a mix of ordinary income as well as capital gains...and even some dividend income as well. Fortunately, it's up to the companies to figure that out and not investors!

The reason I called it rental instead of saying ordinary income was to differentiate, probably better to just say passive ordinary income. Since passive is taxed differently.

With IRAs it falls under the umbrella of what the tax code of the IRAs are. A Roth, you have no tax on it period. A traditional, you will have tax on the gain when you take distributions.

 

[chadly82]

So pissed I sold my AMD. Made money, but damn...

$LAC dipped this morning big time. I'm buying more.

Im right there with you, I had AMD at 41 I believe. Made a few bucks and sold

 

[cyfanbr]

@BCClone and @usedcarguy

All good points. One can definitely still find good opportunities in the US, but you will be fishing in a tougher pond. In generic terms the US is currently a very expensive market, so I personally also look at international markets and a pick a basket of them that have high likelihood of having good returns over the next few years. The way to mitigate your risk is by picking a basket/diversifying. I also personally add a momentum layer to my strategy. Picture below summarizes my thoughts and reasoning way better.



Images are from the report below, which lots of good information.

https://www.starcapital.de/fileadmin/user_upload/files/publikationen/Research_2016-01_Predicting_Stock_Market_Returns_Shiller_CAPE_Keimling.pdf

 

[BCClone]

@BCClone and @usedcarguy

All good points. One can definitely still find good opportunities in the US, but you will be fishing in a tougher pond. In generic terms the US is currently a very expensive market, so I personally also look at international markets and a pick a basket of them that have high likelihood of having good returns over the next few years. The way to mitigate your risk is by picking a basket/diversifying. I also personally add a momentum layer to my strategy. Picture below summarizes my thoughts and reasoning way better.

View attachment 80966View attachment 80967

Images are from the report below, which lots of good information.

https://www.starcapital.de/fileadmin/user_upload/files/publikationen/Research_2016-01_Predicting_Stock_Market_Returns_Shiller_CAPE_Keimling.pdf

I agree with your statement of the US being an expensive market. I think much of the vaccine recovery has been built in, so we have more down risk than up potential. Why that and the changeover has me uncomfortable to invest in stocks how I normally would.

 

[usedcarguy]

The reason I called it rental instead of saying ordinary income was to differentiate, probably better to just say passive ordinary income. Since passive is taxed differently.

With IRAs it falls under the umbrella of what the tax code of the IRAs are. A Roth, you have no tax on it period. A traditional, you will have tax on the gain when you take distributions.

You HOPE that's the case. As DC continues to spend money, at some point the political class will view that as an available pot of money to go after...just as they have decided to tax Social Security benefits if you earn over a certain amount. Some may believe government will keep that promise. I do not.

To clarify your statement about a traditional IRA, you don't pay capital gains taxes. Any dollars pulled out are considered ordinary income...be it dividends, capital gains, or withdrawal of principal. Even if your Traditional IRA is worth less than the total what you contributed, it's still all considered taxable income because the original contributions were exempt from income taxes.

 

[usedcarguy]

@BCClone and @usedcarguy

All good points. One can definitely still find good opportunities in the US, but you will be fishing in a tougher pond. In generic terms the US is currently a very expensive market, so I personally also look at international markets and a pick a basket of them that have high likelihood of having good returns over the next few years. The way to mitigate your risk is by picking a basket/diversifying. I also personally add a momentum layer to my strategy. Picture below summarizes my thoughts and reasoning way better.

View attachment 80966View attachment 80967

Images are from the report below, which lots of good information.

https://www.starcapital.de/fileadmin/user_upload/files/publikationen/Research_2016-01_Predicting_Stock_Market_Returns_Shiller_CAPE_Keimling.pdf

Your strategy poses an interesting philosophical question in that what exactly is it that makes the US market "expensive." Is it increased confidence because of our economic standing and solid regulations, or is it that a discount exists in foreign markets because of a lack of comparable confidence? (perceived or otherwise) I'll admit as quickly as anybody that there are a whole lot of ways to make a buck. I mean look at Tesla. There is no rational basis for a $300 share price let alone where it's at now. IMO absent investing in China or other communist country, the risk would be less than chasing the momentum fools here. Maybe it's just a basic supply/demand issue here of too much money chasing too few of publicly traded companies. Another Federal Reserve created asset bubble.

 

[KnappShack]

Your strategy poses an interesting philosophical question in that what exactly is it that makes the US market "expensive." Is it increased confidence because of our economic standing and solid regulations, or is it that a discount exists in foreign markets because of a lack of comparable confidence? (perceived or otherwise) I'll admit as quickly as anybody that there are a whole lot of ways to make a buck. I mean look at Tesla. There is no rational basis for a $300 share price let alone where it's at now. IMO absent investing in China or other communist country, the risk would be less than chasing the momentum fools here. Maybe it's just a basic supply/demand issue here of too much money chasing too few of publicly traded companies. Another Federal Reserve created asset bubble.

I will say having a position get crushed because the CEO went missing in a communist country has made me think a little....

 

[usedcarguy]

I will say having a position get crushed because the CEO went missing in a communist country has made me think a little....

IKR! But seriously, the government lies about everything. They lie about GDP, the unemployment rate, Wuhan Coronavirus infection and death rates, the theft of IP...EVERYTHING. We really have no idea how much of a house of cards their banking system really is. There is no reason to trust the financials of their companies...regardless of who is auditing them. In China, the fox runs the hen house!

 

[NWICY]

I am all in on TITTIES

Travel, Information Technology, Transportation, IPPs, Entertainment, and Semiconductor

Best way to be in on them is to rent them and not purchase.

 

[NWICY]

I will say having a position get crushed because the CEO went missing in a communist country has made me think a little....

Don't worry he'll be back after he has been "reeducated" and the company turned over to someone more in line with the status quo in China.

 

[cyfanbr]

Your strategy poses an interesting philosophical question in that what exactly is it that makes the US market "expensive." Is it increased confidence because of our economic standing and solid regulations, or is it that a discount exists in foreign markets because of a lack of comparable confidence? (perceived or otherwise) I'll admit as quickly as anybody that there are a whole lot of ways to make a buck. I mean look at Tesla. There is no rational basis for a $300 share price let alone where it's at now. IMO absent investing in China or other communist country, the risk would be less than chasing the momentum fools here. Maybe it's just a basic supply/demand issue here of too much money chasing too few of publicly traded companies. Another Federal Reserve created asset bubble.

The highlighted is a big one I think.

Law of mean reversion says that at some point the market will go back to its mean, and you can use whatever metric you would like here CAPE, PB, PE, etc... so for that to happen either prices need to fall or earnings catch up. Tesla is a perfect example at the current price, people are paying for a crazy high future earning, which is unlikely IMO.

With all that being said this crazy bull market could still go on for who knows how long. I still have a large position in US equities, but I am also diversifying into other asset classes. At some
point all the printing and QE by central banks has to break the horses back or the idea of a “free” market. I figured negative rates would be la la land, but yet here we are.

 

[brianhos]

Buddy currently has $600,000 in AMD at $91 per share and says he is going to hold through earnings on the 26th, he either has steel balls or is a complete moron.

You cannot buy anything from AMD right now, everything they have sells out instantly. They will do great on earnings. But once bitcoin crashes (and it will), then watch out. The video card market will get destroyed.

 

[dmclone]

You cannot buy anything from AMD right now, everything they have sells out instantly. They will do great on earnings. But once bitcoin crashes (and it will), then watch out. The video card market will get destroyed.

I assume this would be true if people still used GPU's for mining.

 

[cyfan21]

I'm on the fence. Do I max out my HSA ($3600) first or Roth ($6000) first?

 

[DSMCy]

I'm on the fence. Do I max out my HSA ($3600) first or Roth ($6000) first?

I'd say HSA. Triple tax advantage.

 

[usedcarguy]

The highlighted is a big one I think.

Law of mean reversion says that at some point the market will go back to its mean, and you can use whatever metric you would like here CAPE, PB, PE, etc... so for that to happen either prices need to fall or earnings catch up. Tesla is a perfect example at the current price, people are paying for a crazy high future earning, which is unlikely IMO.

With all that being said this crazy bull market could still go on for who knows how long. I still have a large position in US equities, but I am also diversifying into other asset classes. At some
point all the printing and QE by central banks has to break the horses back or the idea of a “free” market. I figured negative rates would be la la land, but yet here we are.

It seems to be that the Fed has figured something out the past several years in that the key to keeping the lid on things is to make sure our fiscal irresponsibility is less than that of our peers. In regards to their "competitors," the playing field has become a whole lot easier. The burgeoning bureaucracy in the EU has been a help, but what's really allowed this to go on for so long is the non-stop purchasing of dollars by those outside the US as a means of capital preservation. As the ultimate consumers, we crash the rest of the world when we stop consuming. And when that happens? They buy even more dollars, thus kicking the can down the road. Who the hell knows when it ends!

 

[JimDogRock]

I assume this would be true if people still used GPU's for mining.

The big volume of cryptocurrency mining is in ASIC farms, but ethermining on consumer GPUs is alive and well.
I bought a card 2 months ago strictly to dabble in mining and it's already half paid for from its output. Yes, the market timing was very lucky,

 

[Go2Guy]

I'd say HSA. Triple tax advantage.

HSA. You get the Income Tax deduction and never have to pay for taxes as long as use it for medical expenses. If you decide to use for general expenses (ie, usually after one retires and at a lower tax bracket), you just report it as income. HSA are awesome.

 

[ISUCyclones2015]

I couldn't keep being on the sideline of Wall Street Bets and threw $1000 at one of their idiotic plays....

We live in a society.

 

[clonefreek]

Since January 20th my portfolio is down 9%...wonder what happened that day...